Shares of First Union Corp. slipped during active trading on Wednesday after John Heffern, an analyst at Alex. Brown & Sons, lowered his investment rating on the North Carolina superregional.

First Union was off 37.5 cents to $37.50 after the Baltimore analyst downgraded the stock to "buy" from "strong buy."

The stock is now about 12% below its 52-week high of $40, further from its peak than most of its peers.

Mr. Heffern's concerns and those of other analysts are centered on First Union's recently announced agreement to acquire Dominion Bankshares Corp., Roanoke, Va.

Concern over Deal Prices

The analyst said strong market share and operating efficiencies would eventually prevail for First Union.

But the bank's acquisition program is continuing, he noted, with "lingering uncertainties over pricing discipline" in deals. These concerns may add volatility to the stock, he said.

Kristina E. Anderson of Smith Barney, Harris Upham & Co., New York, retains a "buy" on the company but agreed the stock "could remain under pressure in the near term."

She rates the Dominion acquisition just on "the positive side of neutral."

First Union, she said, had made it a practice to buy "in-market banks that presented significant cost-savings opportunities and generated high returns on investment" that were non-diluted and easy for the market to like.

"The Dominion acquisition appears to be a departure and thus has raised investor concerns about First Union's future acquisitions." Hefty PremiumsPrices paid by first Unionin deals since June Price PremiumAcquired in to bookcompany millions valueDominionBankshares $852 165%South CarolinaFederal 79 143%DecaturFederal 146 113%Source: Smith Barney, Harris Upham & Co.

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